Diamond Smugglers - II

With the success of my Brazilian discoveries, I was hired to go scope out the situation with diamonds in Guyana. (Little country, top of South America, once called British Guyana).

While the Guyanese government takes diamonds and diamond smuggling much more seriously than the Brazilians, they too are not immune from smuggling. Here too I discovered a fairly major smuggling operation, with diamonds coming from Venezuela, getting smuggled into Brazil and laundered to the world via Guyana.

The full report is here:
http://www.pacweb.org/e/

"Triple Jeopardy – Triplicate Forms and Triple Borders: Controlling Diamond Exports from Guyana "

The Report generated a big article in the Sunday version of Brazil's big paper Globo. Here it is translated:

Sunday, 7 May 2006

Page 43

Boa Vista on the diamond contraband Route

International Agency sounds alarm on the risk of Brazil losing certifying and market for stones extracted from the country.

Jose Meirelles Passos

Washington

Little Boa Vista, capital of the state of Roraima, is transforming itself into a growing entrepot of contraband diamonds. And the lack of action by the authorities could wind up compromising all the legitimate national trade of this precious stone. Principally with respect to exports, because Brazil runs the risk of being expelled from the Kimberley Process Certification Scheme, the system of certification that guarantees the authenticity and provenance of diamonds. And, por tabela, the real value of Brazilian product could fcall on the international market, advises Partnership Africa Canada.

According to investigations of the entity – a partnership between the Canadian International Development Agency, and non-governmental organizations of Canada and Africa – Boa Vista is a principal end of a triangle that has Georgetown in Guyana and Santa Elena de Uairen in Venezuela.

Guyana, Roraima and Venezuela in a laundering scheme

This is today the triple frontier of diamond trafficking in Latin America. “The south of Guyana has a long, porous and undefended border with the state of Roraima, in Brazil. And this, in turn, has an equally porous border with Venezuela,” says the report by PAC.

And this area, according to the organization, have everything to become the major laundry of fortunes from the international black market of the sector: diamonds mined in Africa, in non-authorized areas, or stolen by mercenaries, could use the route through Boa Vista to acquire the appearance of legality and enter cleanly into the market.

This is possible because the scheme of the traders of the area involves the acquisition of documents in Guyana which, though official, are at the same time false. For example, the certificates of origin emitted in Georgetown are legal, but the major part of the diamonds to which the papers refer did not come from the place declared in the document.

“Twenty percent of the diamonds mined in Guyana are smuggled to Brazil, where they are classified, and mixed with diamonds that come from Venezuela. They are then taken back to Guyana, together with the Venezuelan diamonds, for the emission of Kimberley certificates, evading the controls of three countries and not paying royalties,” says a piece of the PAC report obtained by Globo.

The equivalent of at least US$8.6 million in diamonds from Guyana were smuggled to Brazil through this scheme last year. At he same time, Brazilian traders acquire in Venezuela about 100 thousand carats – with a value of at least US$11 million – and send them in the same way (i.e. under the table, through smuggling) to Guyana.

There they obtain certificates of origin – as if they were extracted in Guyana – using corruption schemes to be able to export them legally to Europe, Arab countries and the United States. The entire process resembles a classic money laundering operation. According to PAC, authorities deliberately don’t closely examine their own official registries in Guyana.

As it happens there has been an absurd increase in diamond production in Guyana. In 1998, Guyana produced 33,500 carats. The volume jumped to 445 thousand carats by 2004. The increase in the number of garimpeiros, and majority of them from Brazil, certainly helped increase the extraction of diamonds in the region. But the investigations of the agency headquartered in Ottawa, Canada, indicated that the major part of the volume –which comes to be registered as if it were diamonds of local provenance – became possible because of an increase in smuggling.

Stones aren’t detected by airport scanners

The smuggling route for diamonds is practically open. There are control barriers on some roads, but they are inoperative. The couriers can even indulge in the luxury of transporting their stones by air. Diamonds, at the end of the day, do not appear on X-ray machines used to check airport baggage. And in the airports of Georgetown there is not even a inspection post of the Guyana Geology and Mines Commission, responsible for the diamond sector.

“The customs inspections at Cheddi Chagan airport are quite informal. Owing to the culture of petty corruption in Guyana, it’s very likely that someone caught with diamonds could buy the silence of authorities with a small bribe,” says the report “Triple Threat”, containing the results of investigations on smuggling by PAC.

Sunday, 7 May 2006

Page 43

Brazil violates rules of certification

Report of organisation says that Roraima exports stones of other countries

Jose Meirelles Passos

Washington

If in Roraima there exists very little, or almost no diamond mining, whey is its capital Boa Vista full of merchants of the precious stone? This question should alert Brazilian authorities to the suspicion that there is something strange in this scenario, say the directors of the international l agency Partnership Africa Canada. It’s own investigations show that those diamond traders obtain diamonds of Venezuela and Guyana, legally or via smuggling, and after classifying them obtain false certificates of origin to export them.

“The existence of this illicit route turns Venezuela, Guyana and Brazil into violators of their promises with respect to the Kimberly Process (for the international certification of precious stones). And, as the principal actors in this business are Brazilian, it falls to Brazilian authorities – in teh Department of National Mineral Production, Policies Federal and in the Prosecutor’s Office – to take measures to close this illicit route,” suggest the most recent report from PAC.

According to specialists of the organisation, the Brazilian diamond sector is in a crisis. The basic reason is that 50% of national production “comes from fraudulent or highly suspect sources; and of every two Brazilian Kimberley certificates, one is likely false.” Half of the diamond exports from the country, says PAC “are made by fraudsters, fugitives and phantoms.”

The vast majority of Brazilian diamonds are produces by garimpeiros who work in areas without mining permissions. Because of this, to cover the export of diamonds without documentation, Brazilian sellers are obliged to produce documents with apparent legitimacy, says the report from PAC.